Medicare Patients Set to Save Big on Prescription Drugs
A recent report from AARP reveals that millions of Medicare patients can expect significant savings on prescription drugs, thanks to the new $2,000 cap on out-of-pocket spending. This cap, which went into effect at the beginning of the year, is part of President Joe Biden’s 2022 Inflation Reduction Act, aimed at reducing high drug costs.
A Huge Benefit for Older Adults
The report suggests that 94% of Medicare Part D enrollees who reach the new cap in 2025 will see lower out-of-pocket costs, including premiums and cost-sharing, with an average savings of $2,474. This represents a 48% decrease in total out-of-pocket costs. These savings will be particularly beneficial for older adults who struggle to afford high-cost drugs for cancer, rheumatoid arthritis, and other serious conditions.
Savings Across the Country
The report estimates that 62% of Medicare Part D enrollees will save over $1,000 in 2025, while 12% will save more than $5,000. Furthermore, 95% or more of Part D enrollees in 33 states and Washington, D.C. are expected to have lower total out-of-pocket costs in 2025.
Freedom from Financial Burden
According to Leigh Purvis, prescription drug policy principal at AARP, these savings will have a significant impact on Medicare beneficiaries, who typically live on a fixed income of around $36,000 a year. “When you’re able to provide these types of savings, that frees up those funds for other really important things that maybe [patients] were having to make trade-offs for, paying for their food or paying for their rent,” Purvis said.
Premium Increases Offset by Savings
While Part D premiums may increase in some cases, the report suggests that the lower out-of-pocket costs for most patients who reach the $2,000 cap will more than offset these increases. In fact, the positive effect is expected to grow larger as new negotiated prices for the first round of drugs go into effect in 2026.
A Bigger Story Unfolds
The report’s findings are just the beginning of a larger story, as the Medicare program is expected to save a significant amount of money in the long run. This will have a ripple effect, benefiting many people in different ways. As Purvis noted, “This is really a story that is much bigger than it appears.”
Looking Ahead
A separate report from AARP estimates that 3.2 million Medicare recipients will see savings from the out-of-pocket cap in 2025, increasing to 4.1 million enrollees by 2029. With Medicare covering around 66 million people in the U.S., the impact of this new cap will be felt far and wide.
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